Gatundu South MP Moses Kuria wants Parliament to form a select committee to audit Kenya’s economic management as well as interest rates by banks and other financial institutions.
Once filed at the National Assembly, the proposal will be read on the floor and the House Business Committee that is chaired by Speaker Justin Muturi, who will set a date for a motion.
The 15-member committee will have him as chairman, Mr David Mboni (Kitui Rural), Mr Sam Atandi (Alego Usonga), Mr John Sakwa Bunyasi (Nambale), Mr Memusi Kanchori (Kajiado Central), Mr Abdulswamad Shariff Nassir (Mvita) and Mr Kathuri Murungi (Imenti South).
Others are Mr Shakeel Shabbir (Kisumu Town East), Mr Chris Wamalwa (Kiminini), Mr Caleb Kositany (Soy), Ms Purity Wangui Ngirichi (Kirinyaga County), Ms Beatrice Adagala (Vihiga), Ms Rosa Buyu (Kisumu), Ms Soipan Tuya (Narok) and Ms Jessica Mbalu (Kibwezi East).
The Gatundu South MP’s proposal comes after the National Assembly failed to get the numbers to stop the repeal of section 33B of the Banking Act, opening the doors for the return of high interest rates.
The proposal to repeal the Act was contained in the 2019 Finance Bill that was signed into law by President Uhuru Kenyatta on Thursday.
The law, which took effect in 2016 following the passing of a bill tabled by Kiambu Town MP Jude Njomo, imposed rate caps on commercial lending rates at four percentage points above the benchmark Central Bank of Kenya rate.
Supporters of the law said it would cushion Kenyans from exploitation and high loan costs.
Making changes to the law has an effect on interest rates and the market for loanable funds, meaning commercial banks would be at liberty to vary the loan terms.
Already, some banks have issued memos to their staff to review interest rates.
“Following the signing of the Finance Bill into law by the President, the bank has reviewed interest rates for various products based on the associated credit risk. The pricing of the existing loans will be communicated in due course,” Sidian Bank CEO Chege Thumbi said in a November 8 circular to employees.
According to the memo, corporate loans would attract an interest of 16 per cent, small and medium enterprises (17 per cent), consumer (19 per cent), micro/unsecured loans (19 per cent), credit (19 per cent) and mobile (19 per cent).
The Gatundu South MP said if banks “continue to misbehave”, he will reintroduce the capping of interests after six months, in line with parliamentary standing orders.
“If the banks...misbehave and go above the four per cent above the CBK rate, I will reintroduce this amendment. The interest rates must remain at 3-4 per cent,” Mr Kuria told the Nation, adding that the draft bill is ready.
The 15-member select committee would also have the task of auditing the debt registers in view of the expensive loans the Jubilee administration has taken since 2013 when it took office.
It would also review the idle balances held by government Ministries, Departments and Agencies (MDAs) in commercial banks, including funds at the Unclaimed Financial Assets Authority.
Mr Kuria said the team would review tax concessions on infrastructure projects awarded to foreign contractors as well as the insurance premiums repatriated to foreign firms.
“We intend to examine key expenditure items – recurrent and development – for the MDAs for the last five years in relation to zero-based budgeting,” the MP said.
With Kenya’s debt crossing Sh6 trillion mark, Mr Kuria said mandarins at the National Treasury set up chains of self-fulfilling events in order to benefit from the loans.
“Our deficit started with using key performance indicators issued to the Kenya Revenue Authority by Treasury as the basis for budgeting, knowing very well they would never be achieved,” he said.
“More crucially the division of revenue, a first charge on the Consolidated Fund, is then based on this erroneous base.”
“As money must be sent to counties constitutionally, the national government is made to bear the resultant borrowing and pending bills. Pending bills then depress revenue collection, setting the country up for even more borrowing. It's high treason!”
He noted that during the Mwai Kibaki presidency, commercial loans were a paltry fraction of Kenya’s loan books.